Whether you want to give your kitchen a fresh look, build the deck you’ve wanted, or want to make a few bigger home repairs, one of the decisions you’ll face is how to pay for your home improvement. Sure, you could use your credit cards or maybe take advantage of in-store financing, but one of the most convenient ways to pay for larger projects is with a home improvement loan.
Home improvement loans are unsecured, meaning they’re approved based on the borrower’s credit history and income and do not require collateral. They are offered by online lenders, banks, or credit unions and work similarly to personal loans. Once approved, you’ll receive funding through direct deposit or paper check, and then be able to pay for your building supplies and contractors.
Let’s take a look at the top home improvement loan providers and examine whether one is right for you.
Best Home Improvement Loan Companies
Top Pick List
|SoFi||5.99% APR||2 to 7 years||$5,000||$100,000|
|Earnest||5.99% APR||3 to 5 years||$5,000||$75,000|
|Marcus||6.99% APR||3 to 6 years||$3,500||$40,000|
|LightStream||4.99% APR||2-12 years||$5,000||$100,000|
|LendingClub||6.46% APR||3 to 5 years||$1,000||$40,000|
|Avant||9.95% APR||2-12 years||$5,000||$100,000|
|Prosper||6.95% APR||3-5 years||$2,000||$40,000|
Check Your Personal Loan Rates
Answer a few questions to see which personal loans you pre-qualify for. The process is quick and easy, and it will not impact your credit score.
SoFi is among the most user friendly lenders available because everything can be done from the convenience of your home via their website. You can use the project cost estimator to determine how much you might need to finish your home renovation, and you can learn what your rate will be in less than two minutes.
SoFi offers fixed payments, low interest rates and no hidden fees on home improvement loans. They’re a good option for borrowers who have a great credit score, but it can take SoFi as long as a week to fund the loan, which places them at a disadvantage when compared to some of the other lenders.
Disclaimer: Fixed rates from 5.99% APR to 17.67% APR (with AutoPay). Variable rates from 5.74% APR to 14.70% APR (with AutoPay). SoFi rate ranges are current as of October 15, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.74% APR assumes current 1-month LIBOR rate of 2.05% plus 3.08% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636.
Earnest has a unique way of screening candidates. They weigh the expected benchmarks, like your credit history and income, but they also take into account your spending habits, education and your career to determine eligibility.
If you’re approved for a loan, Earnest can fund it in about two business days, which gives them an advantage over SoFi, which takes much longer to release the funds for your project. Earnest also has live agents available around the clock, which you can reach by either phone or email.
The only disadvantage to Earnest is that they require you to give them access to your checking account to determine your spending and saving habits. This might dissuade some borrowers from using Earnest, especially considering that other lenders don’t require this step.
Marcus offers an easy application process online, and you can see the rate you qualify for in about five minutes without impacting your credit score. But that’s not the only advantage to Marcus; they also offer competitive rates starting from 6.99% APR, and are a good option if you have excellent credit.
Still, there are several other factors to consider. The first is that Marcus caps home improvement loans at $40,000, so if you need more to fund an extensive project, Marcus may not be the right lender for you. It can also take Marcus five business days to fund your loan, which means you’re in for a longer wait than you will be with lenders like Earnest.
Rate Disclosure – For New York residents, rates range from 6.99% to 24.99% APR. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans). The available loan term may vary based on your creditworthiness (for example, 72-month loan terms will not be available to all applicants). Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your income must support your ability to repay your loan. Your monthly payment amount will vary based on your loan amount, APR and loan term. For example, a $402 monthly payment is based on a $15,000 loan with a 12.99% APR and 48 monthly payments.
LightStream delivers competitive terms on home improvement loans that are hard to pass up. With interest rates starting as low as 4.99% APR and borrowing limits up to $100,000, this is a great option for home projects of all sizes.
There is a catch, however. Unlike other lenders like SoFi or Marcus, LightStream does not offer pre-qualification. This can be problematic if you want to see what your interest rate will be, but don’t want the hard pull to show up on your credit history. That aside, if you have an established credit history, it’s hard to pass up the competitive and flexible terms LightStream offers.
Disclaimer: Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. If your application is approved, your credit profile will determine whether your loan will be unsecured or secured. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment Example: Monthly payment for a $10,000 loan at 9.84% APR with a term of three years would result in 36 monthly payments of $321.92. Please find our Rate Beat disclosures here.
LendingClub is a peer-to-peer lender, which means that you aren’t borrowing money from a big bank or lender when you go through them. Once you apply and receive approval, individual investors will be the ones who fund your loan.
The process is simple. You’ll apply online like you would with any other loan, and LendingClub assigns you a grade, which corresponds to the interest rate you’ll receive on your loan.
LendingClub should be considered if you have good but not perfect credit, as the lending guidelines are more flexible. As an added bonus, LendingClub is one of the lenders that allow you to have a cosigner for the loan, should you need one.
The main drawback of LendingClub is the fees. They have a loan origination fee between 1% and 6% of your loan amount, and they determine the fee based on creditworthiness. As you can imagine, this may become an expensive option if your credit is less than stellar, especially if you need the funds for a larger project.
Disclaimer: All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history. The APR ranges from 6.95% to 35.89%. For example, you could receive a loan of $5,700 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. *The origination fee ranges from 1% to 6%; the average origination fee is 5.2% (as of 12/5/18 YTD).* There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.
Avant has one huge advantage over other home improvement lenders: they can often fund your loan the day after you’re approved if you opt for direct deposit. They also allow you to check your interest rate without impacting your credit score.
That said, Avant loans come with pretty high interest rates. Their opening rate of 9.95% APR isn’t stellar, considering that other lenders like LightStream offer interest rates starting at 4.99% APR.
Avant does offer some convenient options, such as quicker funding and flexible repayment options, but you may well be paying for those perks with their higher interest rates.
* The actual loan amount, term, and APR amount of loan that a customer qualifies for may vary based on credit determination and state law. Minimum loan amounts vary by state. **Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33. Avant branded credit products are issued by WebBank, member FDIC.
Prosper is similar to other lenders in that you can check your interest rate with no ding to your credit score and you can receive your funding quickly. With interest rates starting at 6.95% APR, this lender is smack dab in the middle on affordability.
Some of that affordability is negated, though, by Prosper’s loan origination fee. This lender charges a fee based on your credit profile, which could cost you anywhere from a few hundred to a few thousand dollars depending on your credit score and how much you need to borrow. Other lenders offer lower interest rates and don’t charge loan origination fees, so make sure you weigh all the factors if you decide to go with Prosper for your loan.
When Should I Get a Home Improvement Loan?
The best time to apply for a home improvement loan is when you have a large renovation project you want to tackle. That could be adding another bathroom to your home, roofing your house or installing a pool, or any other major home-related project. This type of loan is a good option if you don’t have a lot of equity in your home to draw from but need or want to make home improvements.
Before applying, be sure to check your credit history for inaccuracies, and if you find any, dispute them. You’ll want to make sure your credit is in tip top shape so you can get the best rate from lenders. It’s also important to get a few estimates prior to applying for a loan so you have an idea of how much money you need to get the job done.
The Bottom Line
A home improvement loan is a good alternative to high interest credit cards for funding your home renovation projects.
If you’re considering this type of loan, you’ll want to examine which fees they charge. Origination fees can add hundreds of dollars to your loan amount, and there’s no reason to pay them if you don’t have to, especially considering that some lenders, like Marcus and LightStream, don’t charge these fees.
If you want or need to make home renovations and want a convenient way to fund your project, a home improvement loan is one of the better options to explore.